TNAG-1058-FCO40-1308-Guangdong-nuclear-power-station-project-1981 — Page 35

CONFIDENTIAL

SIR ELLY KADOORIE & SONS.

Page

February 27, 1981

Date

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Perhaps what we did not sufficiently realize at the time was that the Chinese, NOT the British, will call the tune, and that if the standards we impose are unacceptable to them they will find someone else to build the Nuclear Power Station.

28)

Should this occur, CLP would undoubtedly have to purchase some power from the Chinese, always provided the cost was lower than that at which they could produce it themselves, even though neither CLP nor British interests would have any say in the operation of the nuclear power station.

29)

Page 5 Para. 3 Dr. Marshall's statement that:

'..design will show considerable differences in the BONP

from the present French reactor'

is accepted, but we have been assured both by Franatome and Bechtel that modifications can be made to meet all reasonable requirements for a reactor, consistent with the latest post-Three Mile Island safety requirements.

30) The French agree that the design changes lie eventually in the BONP rather than the NSSS. They state that this is only a matter of cost.

31) There is no implication that this will require them to change their own programme for the nuclear power stations they are building in France.

In consequence of the above, the third choice, as set out by Dr. Marshall (Page 6 Para. 1) is, in our opinion, the one we should generally follow, viz:

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33)

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Have the French 'build the nuclear island but insist they design a BONP which is consistent with the new NNC design and meets post-Three Mile Island international standards.'

At no time have I stated that I was in favour of:

'abandoning the stance and public commitinent to British

Safety Guidelines.'

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Pages 6 and 7 It seems to me that Dr. Marshall has not taken into consideration the reasoning behind the scheme suggested as the base for the joint venture. This scheme is set forth briefly below:

35)

36)

i)

ii)

iii)

that there should be a Joint Venture Nuclear Power Station (JVNPS) in Guangdong Province, the company to be registered in China and to own the Nuclear Power Station.

that the Guangdong Power Company (GPC), registered in China should hold 60% of the shares in JVNPS.

that the Hong Kong Nuclear Investment Company (HKNIC), registered in Hong Kong should hold 40% of the shares in JVNPS.

iv) that a Project Management Company (PMC), registered in

Hong Kong should be owned 50% by the Guangdong Power Company (GPC) and 50% by China Light & Power Co. Ltd.,(CLP).

The purpose of forming HKNIC is to limit CLP's risks and responsibilities.

It must be clearly understood that CLP will not accept any liability for the JVNPS in Guangdong beyond a small equity participation in HKNIC.

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